A.—4

364

10th Day.] Double Income Tax. [16 June, 1911. Mr. LLOYD GEORGE : I could not accept either of these Resolutions.* Your suggestion is rather a different thing to the Resolutions themselves, and, therefore, even if T were prepared to accept your suggestion now, I could not accept your Resolution. It would hurt me in another form altogether. Therefore, I suggest that it should be withdrawn and we might discuss the other point, say on Monday or Tuesday, after I have had time to consider it, and perhaps you will give me a copy of your memorandum so that I may see it in writing too before then, and then I will get a report upon what it really means to our revenue. Dr. FINDLAY : This Resolution includes death duties as well, which have not been touched upon yet General BOTHA: Yes, my Resolution includes death duties. Mr. LLOYD GEORGE : Yes, I could not accept that nor No. 15, as far as income tax is concerned. Mr. HARCOURT : Will you deal with death duties now ? General BOTHA: Yes, I will leave the income tax point and go on with death duties, because the one Resolution deals with death duties as well. Sir JOSEPH WARD : I was exceedingly interested to hear General Botha's statement that he hoped in the four years which have elapsed since the last Conference the Government might have appreciated or understood the difficulties that presented themselves four years ago. Double Estate Duties. General BOTHA : Turning now to the question of double death duties, this is not quite on the same footing as double income tax, inasmuch as the Imperial Government, in the Finance Act of 1894, section 20, have accepted in principle the desirability of avoiding double estate taxation within the Empire. The fundamental principles of the British estate duty are set out in the Treasury Memorandum of the 28th February, 1911, which forms Papei No. 15 in the volume of Conference Memoranda. The facts as set out in the Treasury Memorandum are not in dispute, and I need not therefore go over the ground again at the present time. In South Africa an opportunity has not yet occurred of introducing uniform estate duty legislation. . The four Provinces comprising the Union still retain their respective laws, but I hope before long bo see one consolidated measure in operation for the whole country. It would be a matter of congratulation to the Government and people of South Africa if we could provide in this new legislation for reciprocity in the matter of avoiding double death duties. Unfortunately the interpretation placed upon section 20 of the Imperial Finance Act, 1894, as regards the " situation " for taxation purposes of shares and debentures, renders it virtually impossible for us to avail ourselves of the advantages offered by that section. It is a condition precedent to any Dominion receiving the benefits of section 20 of the Imperial Act, that it accepts the British law and practice as to " situation " of taxable property. If we were to defer to these requirements, it would involve a sacrifice of death duties that the country cannot afford. His Majesty's Government, in the Finance Act of 1894, have recognised that double taxation in the case of death duties should be reduced as far as possible, but I submit that by placing a too rigid interpretation upon the provisions of that Act, they, to a large extent, defeat the objects and intention of the measure. The Union Government contends that while the principle of the English law is purely artificial, the equitable view is that the situation of shares and debentures in a company should be in that country where the company is registered, where it can be controlled by the Legislature, and where the country can exercise jurisdiction ovex it. The Union Government could undoubtedly pass such legislation as would cause shares in companies registered in South Africa to be situate in South Africa within the meaning of section 20 and so

* Note. —This matter is still forming the subject of communication by correspondence.